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Home My WebLink AboutItem A: URA - WG Development (10th and Charnelton) EURA UGENE RBAN ENEWAL GENCY AIS GENDA TEM UMMARY Work Session: Update on Sale and Development of 10th and Charnelton Site Meeting Date: March 9, 2009 Agenda Item Number: A Department: Planning & Development Staff Contact: Nan Laurence www.eugene-or.gov Contact Telephone Number: 682-5340 ISSUE STATEMENT On November 25, 2008, the Urban Renewal Agency (URA) signed a Purchase and Sale th Agreement (PSA) with W & G Development (WG) for the 10 and Charnelton site. The PSA requires WG to purchase the property by March 31, 2009, and to commence construction by November 30, 2009. In light of the national economic downturn and the uncertainty involved with current investment and construction decisions, WG has sent the URA a letter indicating difficulties in meeting the agreed-upon deadlines and requesting a minimum of six months extension (see Attachment A). BACKGROUND th A Request for Proposals was issued in March 2008 for the sale and development of the 10 and Charnelton development site. Five proposals were received by the May 30, 2008 deadline. On July 30, the Urban Renewal Agency (URA) considered two proposals, WG and Opus NWR Development. The URA selected WG as the preferred development proposal and directed staff to outline the terms of the sale and development. On October 22, 2008, the URA approved the outline of terms and directed the Agency Director th to enter into a Purchase and Sale Agreement for the sale and development of the 10 and Charnelton Development site consistent with the outline of terms. The approved outline of terms requires WG to purchase the property by March 31, 2009, and to commence construction, defined as the submission of building permits, by November 30, 2009. The URA and WG signed the PSA on November 25, 2008. In addition to approving the outline of terms for WG, the agency directed staff as follows: “in the event that the URA would be unable to successfully execute an agreement by March 31, 2009 that the URA enter into negotiations with Opus NWR Development.” The Agency clarified that formal negotiations would begin after March 31, 2009, but informal negotiations would occur before that time. th The national economic climate has affected the context for the redevelopment of the 10 and Charnelton site. Since October 2008, uncertainty over market performance and expectations has created difficulty for potential developers, tenants and lenders. Z:\CMO\2009 Council Agendas\M090309\S090309A.doc WG Development Since the PSA was signed in November, staff has worked closely with WG to address or complete the requirements of the PSA, as applicable. A list of the key terms and the relevant progress on each is listed below. a.Purchase Price – $500,000 (no change). b.Project Related Fees. The City committed to payment of building and related permit fees. Update: City Council action on URA expenditure authority for estimated expenses including building permits fees is scheduled for March 9, 2009. c.Deposit – $50,000. WG Development provided a $50,000 note for the earnest money due upon WG’s acceptance of Conditions of Closing. The earnest money becomes nonrefundable at the end of the Due Diligence Period. d.Due Diligence Period. The Due Diligence Period is from November 25, 2008 to March 30, 2009, a period of approximately 120 days. e.Alley vacation. City Council vacated the mid-block, north-south alley on February 23, 2009. f.Multi-Unit Property Tax Exemption (MUPTE). City Council approved WG’s application on February 23, 2009. g.Bureau of Labor and Industry (BOLI) Determination. The City submitted a request to BOLI to determine if the proposed project is subject to the Prevailing Wage Rate law on December 22, 2008, with updated materials as requested on January 9, 2009. The determination is expected in mid-March 2009. h.Timing. The property sale closing must occur no later than March 31, 2009, and building permits for the project must be submitted by November 30, 2009. WG has indicated a need to extend both of these deadlines. Opus Development Following URA direction regarding Opus, staff maintained contact with Opus to ascertain continued interest and related timing that would be required for their decisions. Opus submitted a letter expressing their sustained interest in the acquisition and development of the site, while acknowledging the uncertainty of current economic conditions (Attachment B). The letter indicates that they would need to enter into a binding agreement with the Urban Renewal Agency, with the expectation of completing due diligence by the beginning of 2010 and beginning construction by the spring of 2010. RELATED CITY POLICIES th Future development of the 10 and Charnelton site is consistent with the policies in the Eugene Downtown Plan, including: Z:\CMO\2009 Council Agendas\M090309\S090309A.doc Downtown development shall support the urban qualities of density, vitality, livability and ? diversity to create a downtown, urban environment. Stimulate multi-unit housing in the downtown core and on the edges of downtown for a ? variety of income levels and ownership opportunities. Actively pursue public/private development opportunities to achieve the vision for an active, ? vital, growing downtown. Use downtown development tools and incentives to encourage development that provides ? character and density downtown. Relevant Downtown Plan Implementation Strategies include the following: Promote multi-story, mixed-use structures downtown through financial incentives or code ? amendments. Encourage education-related development downtown, such as student housing and support ? services. th In addition, the proposed future development of the 10 and Charnelton site is responsive to the following Growth Management policies: Policy 1: Support the existing Eugene Urban Growth Boundary by taking actions to increase density and use existing vacant and under-used land within the boundary more efficiently. Policy 2: Encourage in-fill, mixed-use, redevelopment, and higher density development. Policy 3: Encourage a mix of business and residential uses downtown using incentives and zoning. Policy 10: Encourage the creation of transportation-efficient land use patterns and implementation of nodal development concepts. Policy 14: Development shall be required to pay the full cost of extending infrastructure and services, except that the City will examine ways to subsidize the costs of providing infrastructure or offer other incentives that support higher-density infill, mixed use, and redevelopment. AGENCY OPTIONS 1. Direct the Agency Director to amend the Purchase and Sale Agreement to extend a) the Due Diligence period from March 30, 2009 to March 30, 2010 and b) the Commencement of Construction from November 30, 2009 to November 30, 2010. 2. Direct the Agency Director to amend the Purchase and Sale Agreement to extend a) the Due Diligence period from March 30, 2009 to September 30, 2009 and b) the Commencement of Construction from November 30, 2009 to May 30, 2010 and request a written update from the developer three months into the extension. 3. Direct the Agency Director to immediately begin negotiations with Opus, and if the transaction with WG does not close by March 31, 2009, to bring final terms with Opus to the Agency as soon as practicable after the council break. 4. Take no action at this time. th 5. Provide other direction to the Agency Director regarding the sale and development of the 10 and Charnelton development site. Z:\CMO\2009 Council Agendas\M090309\S090309A.doc AGENCY DIRECTOR’S RECOMMENDATION Direct the Agency Director to immediately begin negotiations with Opus, and if the transaction with WG does not close by March 31, 2009, to bring final terms with Opus to the Agency as soon as practicable after the council break. SUGGESTED MOTION Move to direct the Agency Director to immediately begin negotiations with Opus, and if the transaction with WG does not close by March 31, 2009, to bring final terms with Opus to the Agency as soon as practicable after the council break. ATTACHMENTS A.Letter from WG Development dated March 2, 2009 B.Letter from Opus Development dated February 27, 2009 FOR MORE INFORMATION Staff Contact: Nan Laurence Telephone: 682-5340 Staff E-Mail: nan.laurence@ci.eugene.or.us Z:\CMO\2009 Council Agendas\M090309\S090309A.doc